High state taxes on biodiesel are effectively rendering the green fuel significantly more expensive than regular diesel, according to the Biodiesel Association of India, which also called on the central government to continue with the excise duty exemptions for the sector.
“The industry is just not moving ahead because of skewed rates of taxation, which continue to be a major hurdle,” Sandeep Chaturvedi, President of the Biodiesel Association of India (BDAI) told The Hindu .
“The taxes by the state government are very high. As soon as biodiesel is blended with diesel, the taxes can go as high as 20-30% depending on the state government. The biodiesel itself becomes ₹7-8 more expensive than diesel because of the tax element.”
Biodiesel consumption
According to Mr. Chaturvedi, the annual consumption of biodiesel in India is about 80 lakh litres, which, he said, needed to go up drastically if India is to meet its target of a 10% reduction in oil imports.
In the July 2015 interim Railway Budget, the government had said that railways would blend up to 5% of biodiesel with their fuel.
“That immediately started activity across the country,” Mr. Chaturvedi said. “Out of the 16 zonal railways, 15 started using biodiesel. Now the key hurdle there was the marketing regulation.
“The law is from 2005 and it says that nobody other than the OMCs approved by the Ministry of Petroleum is allowed to sell. This was amended on January 16, 2015 by the Cabinet and biodiesel was allowed to be sold to private consumers. That was notified by the Ministry after about eight months.”
Regarding the high rates of state taxes, Mr. Chaturvedi said that the BDAI had approached the Centre but they could not alter state-level tax rates.
However, a few states, including Andhra Pradesh and West Bengal, have taken the initiative and have reduced the tax rates, he said.
“From April 1 till [the time] GST comes, the excise incentives for biodiesel should continue,” Mr. Chaturvedi said. “Otherwise the entire exercise would come to a standstill.”
Environmental costs
“In India, if the environmental costs are not being borne by the government, then they are not quantified at all,” he added. “Now, finally, IIT Mumbai has done a study and they have come up with a startling finding that in 2015, about 82,100 died of air-related diseases, mostly due to vehicular pollution.”
“Using biodiesel can reduce hydrocarbon usage by almost 80%, and particulate matter emissions can be reduced by 38-40%, and there is no sulphur emissions,” Mr. Chaturvedi said.
He added that another study by the Meteorological Department had found that the rainwater has turned highly acidic in many areas.
“In some places like Nagpur, the pH level has risen to 4.5, which is highly acidic,” he said.
“And then you talk about the farmer not getting his yields, and the poor fellow won’t even know why even if it rains sufficiently,” Mr. Chaturvedi said.
The problem, according to Mr. Chaturvedi is that there is no proper national policy on biodiesels, since the policy framed in 2009 has not been gazetted as of now.
“We have spoken to [New and Renewable Energy Minister] Piyush Goyal,” Mr. Chaturvedi said. “When he speaks of renewables, he speaks of solar and wind. Biodiesel gets no mention. But you cannot wish it away.”
